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Credit Card To Boost Credit Scores To Qualify For Mortgage

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Credit Card To Boost Credit Scores To Qualify For Mortgage

This BLOG On Using Credit Card To Boost Credit Scores To Qualify For Mortgage Was UPDATED On May 15th, 2019

Using a credit card can be both a positive and negative. Many consumers have been inseparable with their credit card through every daily transaction. Others vow never to use a credit card again due to bad past experiences in getting into debt. Unfortunately, those interested in qualifying for a mortgage may need to get a few secured credit cards. Many consumers with no credit cards or open lines of credit have lower credit scores where it disqualifies them for a home mortgage. Having positive open revolving accounts with very low balances is key in having higher credit scores. Higher credit scores mean lower mortgage rates, lower insurance premium, and being able to qualify for the best loan program when it times to qualify for a home.

Things To Know About Credit Cards

  • Is paying monthly balance timely a burden?
  • Know all of the credit card details?
  • Credit Limit?
  • Interest Rates?
  • Rewards and Benefits?

Many consumers had bad experiences with overspending with their credit cards and ended up defaulting on them. Many have filed bankruptcy. Consumers who filed bankruptcy due to high debt with credit card usage vowed they will never open another credit card account ever again. Many keep to those promises. However, not having any active revolving accounts can dwarf credit scores and can trigger obstacles when applying for home mortgages.

Credit Card Companies

The fact is you’ve been kept in the dark about several secrets. This is because financial benefit comes at card issuer’s financial loss. Credit card companies offer unsecured credit at very high interests. Consumers need to be careful in maxing out all of their credit card balances. With interest rates higher than 20%, it will be very difficult in paying off credit card balances in a short period of time.

Here are a few things that a carrier doesn’t want credit card holders to know.

  • Fixed rates aren’t really fixed
    • Issuers can raiseAPR whenever they choose
    • This information isn’t necessarily a blatant secret
    • It’ll be hidden so deeply in the fine print of cardholder’s agreement that card companies are hoping consumers miss it
  • One late payment, two penalties
    • In a perfect world, one late payment equals one penalty fee;
    • on-time payments equal zero fees
    • In this imperfect world, consumers can be penalized with two surcharges on one delinquency
    • Consumers won’t know about them until they have been charged
  • Twice the interest in one month?
    • Another one-two financial punch comes in the form of a legal maneuver which allows credit card company to impose two months’ interest for just one month of late balance payments
  • Disgraceful grace periods
    • How many of us who’ve made big-ticket purchases have been thankful for the grace period?
    • Say consumers charge $1,000 to card card
    • They pay $250 by the due date to hold over creditors
    • Most cards carry grace periods up to about 25 days
    • This allows consumers to pay off the remainder, interest-free
    • But in the spirit of profiteering, many providers are reducing the grace period to just 20 days, while some are doing away with them altogether
  • No card limits just with limits
    • Many consumers in possession of a no-limit charge card discover they have a revolving spending cap
    • Let’s use $3,000 – but only learn of it after racking up $5,000 in purchases
    • This leaves consumers stuck with a remaining $2,000, plus interest, to pay off
    • Why is this so?
    • Credit card company advertised plastic as no limits
    • But it’s really set at a no preset limit
  • Minimum payments to the maximum
    • It’s the nature of the credit beast
    • The longer you stay in debt, the more interest credit card companies can charge, and the more money they make
  • Late payments to any creditor can raise your APR
    • We hope that our creditors aren’t wishing us to slip up on our repayments
    • But if there’s one thing to take away from this article, it’s to be on time paying down debt
    • A partial payment, be it credit card, car or mortgage payment, can jack up total APR across each line of credit in consumers name

Adding New Credit To Boost Credit Scores To Qualify For Mortgage

Home Buyers with no open active credit tradelines will have lower credit scores. There are many financially responsible consumers who do not want any credit cards and only spend cash. Unfortunately, this is not a good idea when it comes to applying for a home loan. Lenders want to see previous spending habits. Consumers with lower credit scores due to no credit can easily boost their credit scores by getting three secured credit cards. Each secured credit card can boost one’s credit scores by 30 or more points. If consumers do not have at least a 700 credit scores, do not apply for any unsecured credit cards. Secured Credit Cards are the best and fastest tools in raising credit scores to qualify for a mortgage.

Michael Gracz is a contributing editor for Gustan Cho Associates Mortgage News and a financial writer and credit repair expert. Mike Gracz has helped countless home buyers and folks in need of credit repair.  Mike is a non-for-profit credit repair consultant to many real estate agents, mortgage brokers, attorneys, and other professionals who need to help their clients with credit repair services.  Mike Gracz and his staff work daily with consumers, automobile dealers, real estate professionals, mortgage brokers, banks, credit unions, and mortgage bankers in order to repair consumer’s credit reports and maximize their credit scores so they can qualify for home loans.  For a free credit repair analysis of credit report to qualify for a mortgage, please contact Michael Gracz at 630-654-7644 or text Michael for faster response. Or email Mike at mgracz@gustancho.com.

  1. Gustan Cho, NMLS 873293 says

    To get the most effect with secured credit cards, get a $500 credit limit cards. Any credit limit under $500 dollars will not have the most effect in boosting credit scores.

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